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From King World News:
Former presidential aide acknowledges causes for gold price suppression
Philippa Malmgren, financial counselor to President George W. Bush, tells King World News it’s easy for governments to influence the gold price, that they have motive to suppress it, and that governments that hold U.S. dollars and fear their devaluation have motive to accumulate gold to hedge their dollar exposure. Malmgren says she finds it “extraordinary” that countries seeking to hedge their dollar exposure “can increase their holdings of gold so dramatically and yet the price goes down.”
Malmgren was special assistant to the president of the United States for economic policy and a former member of the U.S. President’s Working Group on Financial Markets (also known as the Plunge Protection Team, or PPT) during the George W. Bush administration. She also served as financial market adviser in the White House and functioned as the direct liaison between the White House and the Federal Reserve.
She also told King World News:
“After events in Ukraine, the Russians also feel very strongly [about unseating the dollar]. I think what we are going to find is that both China and Russia have entirely ceased to be buyers of U.S. Treasuries …
“In fact, a very odd thing has happened – the biggest buyer now of U.S. Treasuries is Belgium. And, of course, Belgium doesn’t have a very healthy balance sheet itself, so it’s a little worrying that Belgium is our backer at this point. (laughter)
“But at any rate, I think both Russia and China feel that they don’t want to buy any more paper financial assets from the United States. If they are going to invest in the U.S. it’s going to be in hard, real-economy assets.”
Gold prices set to decline through 2015: Report
LONDON: Gold prices are likely to keep falling through 2015 after a second annual decline this year as U.S. monetary policy normalizes and investors switch to higher-yielding assets, the GFMS [Gold Fields Mineral Services] team at Thomson Reuters said in a report on Thursday.
Physical demand, which hit record levels last year after prices plummeted in the second quarter, is expected to remain firm but will not be enough to offset a continued decline in Western investment, GFMS said in its 2014 Gold Report.
From the Gold Anti-Trust Action Committee, or GATA:
Defense of London gold fixing distracts from central bank involvement
The March edition of the London Bullion Market Association’s magazine, The Alchemist – presumably named for the ability of LBMA members to turn gold into paper – carries a long defense of the daily London gold price fixings against complaints that they are likely manipulated by their participating bullion banks.
Indeed, probably every bullion bank participating in the London gold fixes is used by various central banks as cover for surreptitious intervention in the gold and currency markets. At least that is the powerful implication of the secret March 1999 report of the staff of the International Monetary Fund, which found that Western central banks are determined to conceal their gold swaps and leases to facilitate their surreptitious interventions.
At least Barrick Gold, once the big hedger among gold miners, admitted a decade ago that it had become an agent of central banks when it borrowed their gold and sold it into the market.
Wall Street Journal:
Merger talks between gold giants Barrick and Newmont break down
Barrick Gold Corp. and Newmont Mining Corp. recently held abortive talks over a deal that would have combined the world’s two largest gold producers at a time when they are battling a sharp drop in the price of gold, according to people familiar with the matter.
The two companies had intended to announce a deal in April, one of the people said. They have discussed combining a number of times before, people familiar with the matter have said, and it is possible they could do so again. The deal talks come as the companies try to adapt to lower gold prices. The precious metal’s futures fell 28 percent last year, their biggest annual price drop since 1981.
Both companies, which have operations on five continents, have made a string of acquisitions over the years. Barrick’s largest was the takeover of rival Canadian gold miner Placer Dome Inc. for $10.4 billion in 2006, while Newmont’s biggest addition was the simultaneous takeover of Australia’s Normandy Mining Ltd. and its largest shareholder, Canada’s Franco-Nevada Mining Corp., for $4.4 billion in 2002.
Barrick’s Cortez mine in Nevada produced 1.34 million ounces of gold in 2013, making it one of the world’s largest. But output is expected to decline to as low as 925,000 ounces this year.
From Germany’s Der Spiegel:
Out of Ammo? The Eroding Power of Central Banks
Since the financial crisis, central banks have slashed interest rates, purchased vast quantities of sovereign bonds and bailed out banks. Now, though, their influence appears to be on the wane with measures producing paltry results. Do they still have control?
Once every six weeks, the most powerful players in the global economy meet on the 18th floor of an ugly office building near the train station in the Swiss city of Basel. The group includes United States Federal Reserve Chair Janet Yellen and her counterpart at the European Central Bank (ECB), Mario Draghi, along with 16 other top monetary policy officials from Beijing, Frankfurt, Paris and elsewhere.
The attendees spend almost two hours exchanging views in a debate chaired by Bank of Mexico Governor Agustín Carstens. Waiters serve an exquisite meal and expensive wine as the central bankers talk about the economy, growth and market prices. No one keeps minutes, but the world’s most influential money managers are convinced that the meetings help expand their knowledge in important ways. …
From Zero Hedge:
Gold futures halted again on latest furious slamdown
It seems the two words “fiduciary duty” are strangely missing from the dictionary of the new normal’s asset management community. This morning, shortly before 8:27 a.m. ET, someone decided that it was the perfect time to dump thousands of gold futures contracts worth over half a billion dollars notional. This smashed Gold futures down over $12 instantaneously, breaking below the 200DMA and triggered the futures exchange to halt trading in the precious metal for 10-seconds. Palladium also got clobbered and was also halted. This is gold’s worst since Bernanke ‘tapered’ in December.
From Mauldin Economics:
Grant Williams: All markets are rigged, maybe gold most of all
All markets are rigged these days, perhaps the gold market most of all, fund manager Grant Williams writes in the new edition of his “Things That Make You Go Hmmm …” letter. A few excerpts:
“In order for market rigging to be stopped, the changes have to come from those entrusted with regulation, in the form of stern punishments for those caught rigging them, and there must be changes to the rules to close the loopholes that allowed this kind of activity to occur in the first place.
“Instead, the bodies which supposedly oversee the markets are involved in the most serious rigging of all.
“What chance is there that we will see any change?
“Get used to it, folks. As anyone who looks at financial markets up close with their eyes open will tell you, they are all rigged — it’s simply a question of degree. The question is: Do you adapt and work around the rigging or do you simply decide not to play?
“Central banks and governments seriously hope you choose the former option.”
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